How it's calculated
The calculator works out the tax on your 2026–27 return (1 July 2026 to 30 June 2027) the way the law sets it out: taxable income, then income tax at the rates for your residency, less tax offsets, plus the Medicare levy, any Medicare levy surcharge and any compulsory study loan repayment.
- Taxable income = salary and other income − deductions. From 2026–27 employees can take a standard deduction for work-related expenses of up to $1,000, reduced by any work expenses they claim, so it only helps if your actual expenses are smaller.Federal Register of Legislation
- Resident rates. Nothing on the first $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above. The bottom rate fell from 16% to 15% on 1 July 2026 and is legislated to fall to 14% from 1 July 2027.Federal Register of Legislation
- Foreign residents pay 30% from the first dollar, with no tax-free threshold and no Medicare levy. Working holiday makers pay 15% up to $45,000.
- Low income tax offset. Up to $700 for residents, reducing above $37,500 and gone at $66,667. It can cut your tax to nil but isn't paid out as a refund.Federal Register of Legislation
- Medicare levy. 2% of taxable income, nil up to $28,011 and phased in up to $35,013, with a family reduction for couples and single parents on low incomes.Federal Register of Legislation
- Medicare levy surcharge of 1% to 1.5% if you have no private hospital cover and your income for surcharge purposes is above $105,000 (singles).
- Study loans: 15% of repayment income above $69,528, 17% above $129,717, capped at 10% of repayment income.Federal Register of Legislation
The formula
- Taxable income = income − work deductions − other deductions − standard deduction, ignoring cents.
- Income tax = sum over the bands of (income in band × band rate).
- LITO = $700 up to $37,500; $700 − 5% of the excess to $45,000; $325 − 1.5% of the excess to $66,667.
- Medicare levy = the lesser of 2% × taxable income and 10% × (taxable income − threshold).
- Total = max(0, income tax − LITO) + Medicare levy + surcharge + study loan repayment.
Worked example
On $90,000 of salary, the $1,000 standard deduction gives taxable income of $89,000. Income tax after offsets is $17,220, the Medicare levy $1,780, so the total is $19,000.
| Line | Per year |
|---|---|
| Salary and wages | $90,000 |
| Standard deduction for work expenses | -$1,000 |
| Taxable income | $89,000 |
| Income tax on taxable income | $17,220 |
| Medicare levy | $1,780 |
| Total tax, levies and repayments | $19,000 |
| Income after tax | $71,000 |
On $40,000 the low income tax offset is $625 and the total tax is $3,275. A foreign resident on $90,000 pays $27,000.
| Line | Per year |
|---|---|
| Salary and wages | $150,000 |
| Standard deduction for work expenses | -$1,000 |
| Taxable income | $149,000 |
| Income tax on taxable income | $36,200 |
| Medicare levy | $2,980 |
| Medicare levy surcharge (1.25%) | $1,863 |
| Study loan (HELP) repayment | $12,306 |
| Total tax, levies and repayments | $53,349 |
| Income after tax | $96,651 |
Assumptions and limitations
- A full year as a resident (or as a foreign resident or working holiday maker). Part-year residents get a reduced tax-free threshold, which isn't modelled.
- Medicare levy thresholds are those in the Medicare Levy Act for 2025–26 and later years. Governments often raise them in the following Budget; if that happens for 2026–27 the levy for low incomes will be a little lower.
- Not included: the seniors and pensioners tax offset and its higher Medicare thresholds, Medicare levy exemptions, franking credits, capital gains discounts (enter your net capital gain as other income), the private health insurance rebate and employment termination payments.
- The surcharge assumes a whole year without hospital cover.